C

onsu

mer

Sta

ple

s Sin

gapore

1.57

July 31, 2021

THIS REPORT HAS BEEN PREPARED BY MAYBANK KIM ENG RESEARCH

SEE PAGE 24 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Co. Reg No: 198700034E MICA (P) : 099/03/2012

Tear Sheet Insert

Kareen Chan kareenchan@maybank.com (65) 6231 5926

Sheng Siong Group (SSG SP)

Prefer a promo price

Best days are over; Initiate SELL

Initiate coverage on SSG with SELL as it’s unlikely to see another windfall

year as more people will dine out as the ban should be lifted in 4Q21

once vaccination rate passes 80% in the city. Also, near-term catalysts

are limited as new store opening visibility is low. All told, we forecast

FY22 EPS to decline 7% YoY Our TP of SGD1.33 is based on 19.5x FY22E

EPS, or -0.5 SD below its historical mean. Take profit on strength and

switch to ThaiBev (THBEV SP, CP: SGD0.67, TP: SGD0.91) and/or

ComfortDelGro (CD SP, CP: SGD1.55, TP: SGD1.88) for reopening plays.

Industry becoming less favourable

Euromonitor projects supermarket sales to decline by 5% CAGR from

2020-2023E. This is because supermarket sales are likely to normalise in

the near to medium term as consumers switch to eating outside. The

high base sales effects and gradual easing of dining-out measures in 4Q21

due to acceleration of vaccination will drive the impending industry

decline. We believe SSG, being the second largest supermarket operator

in Singapore, is vulnerable to such industry headwinds. At the same time,

the pandemic has also accelerated food delivery, which could change

consumers’ dining habits post-Covid. Meanwhile, its China store

expansion plan is still at an early stage and China sales make up only 2%

of group revenue. Therefore, we estimate revenue per sqft to taper to

6% CAGR to SGD2,000 by FY23E from SGD2,423 in FY20.

Fewer new store openings

New store opening has been a significant driver for SSG over the past few

years. However, we are seeing limited visibility due to much fewer HDB

tenders. Given disruption to the construction industry caused by the

pandemic, there are currently no successful shop tenders. Tenders are

more likely towards the end of 2021 to 2023 as HDB rushes to clear the

backlog. As such, our forecast assumes one new Singapore store for

FY21E, three in FY22E and FY23E. This translates to a retail space CAGR

of 5%, below its average of 12% between 2017 and 2020. With tapering

demand and slower increase in new store opening, we forecast FY22 EPS

to decline 7% YoY.

Sell on strength; switch to re-opening plays

SSG is trading at 23x FY22E P/E, which is a 65% premium to its Asian

peers. We prefer a better entry point and/or take profit on strength

given its near- to medium-term earnings downcycle, as well as potential

market rotation to post-Covid beneficiaries. Higher-than-expected new

store openings and/or slower tapering of demand could pose upside risk

to our TP.

Share Price SGD 1.57

12m Price Target SGD 1.33 (-12%)

SELL

Company Description

Statistics

52w high/low (SGD)

3m avg turnover (USDm)

Free float (%)

Issued shares (m)

Market capitalisation

Major shareholders:

29.8%

9.2%

9.1%

1,504

5.8

Mass-market supermarket operator. Sheng Siong

Group is the second largest supermarket operator by

market share.

Sheng Siong Holdings Pte Ltd.

LIM HOCK CHEE

LIM HOCK ENG

1.85/1.49

41.7

SGD2.4B

USD1.7B

Price Performance

80

100

120

140

160

180

200

220

240

260

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21

Sheng Siong - (LHS, SGD) Sheng Siong / Straits Times Index - (RHS, %)

-1M -3M -12M

Absolute (%) (1) 1 (8)

Relative to index (%) (2) 3 (26)

Source: FactSet

FYE Dec (SGD m) FY19A FY20A FY21E FY22E FY23E

Revenue 991 1,394 1,355 1,284 1,278

EBITDA 111 187 159 140 140

Core net profit 76 140 117 102 102

Core EPS (cts) 5.0 9.3 7.8 6.8 6.8

Core EPS growth (%) 7.4 85.2 (16.8) (12.6) (0.5)

Net DPS (cts) 3.5 5.3 5.3 5.3 5.3

Core P/E (x) 24.6 16.6 20.2 23.1 23.2

P/BV (x) 6.0 6.3 5.8 5.5 5.2

Net dividend yield (%) 2.8 3.4 3.4 3.4 3.4

ROAE (%) 25.1 40.9 29.9 24.2 22.9

ROAA (%) 15.6 22.9 15.5 11.9 11.5

EV/EBITDA (x) 16.2 11.3 13.7 14.9 15.3

Net gearing (%) (incl perps) net cash net cash net cash net cash net cash

Consensus net profit - - 105 108 113

MKE vs. Consensus (%) - - 10.8 (5.7) (9.8)

July 31, 2021 2

Sheng Siong Group

Value Proposition

Overtook Dairy Farm Int’l (DFI SP, CP: SGD4.13, Non-Rated)

as the 2nd largest supermarket operator in 2018 in terms of

market share in Singapore.

Stores spanning across HDB heartlands, which helps SSG

keep tight control over rental costs.

The emphasis on the sale of fresh-items has kept its sales

mix favourable. This has resulted in improvement in gross

profit margin over the past few years.

However, the supermarket operator is unlikely to see

another windfall year as more people will dine out as the

ban should be gradually lifted in 4Q21.

Gross profit margin

Source: Company data

Price Drivers

Historical share price trend

Source: Company, Maybank Kim Eng

1. Gross margin exceeded 26% for the first time in 2Q16,

driven by improvement in bulk handling and favourable

sales mix towards higher margin fresh produce.

2. Stock corrected and became range-bound after

Amazon’s plan to enter ASEAN.

3. Top line continued to benefit from new store openings

and higher gross profit margin.

4. Lockdown resulted in elevated demand, while positive

operating leverage drove a sharp jump in the

bottomline.

5. Stock price corrected from its record high due to the

easing of social-distancing measures.

Financial Metrics

We forecast a three-year revenue CAGR of -3% due to

tapering sales and fewer store openings as there should be

less HDB tenders amid the pandemic. Supermarket sales

should decline once the dining ban is lifted and more eat

outside. .

We expect gross profit and net margin to continue to

benefit from favourable sales mix and operating leverage.

Capex likely to ease in FY21E, as there are currently no

HDB tenders due to construction delays. We expect its balance sheet to remain strong with net cash

of SGD272m.

Net profit and net margin forecasts

Source: Company data, Maybank Kim Eng

Swing Factors

Upside

Stronger-than-expected revenue growth if the dining ban

is extended.

More tenders for HDB commercial properties for new

supermarkets than expected.

More people prefer to eat at home rather than dining

out.

Downside

Sales growth slows more than expected, as dining out

ban is lifted and travel borders reopen.

Sudden and unexpected jump in input prices that cannot

be passed on to consumers. Gross profit margin will

decline as a result.

Change in consumer habits to dining out more or food

delivery services instead if home-cooked meals.

kareenchan@maybank.com

26.9%

27.4%27.5%

27.2% 27.2%

26.6%

26.7%

26.8%

26.9%

27.0%

27.1%

27.2%

27.3%

27.4%

27.5%

27.6%

2019 2020 2021E 2022E 2023E

80

100

120

140

160

180

200

220

240

260

280

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

Jul-16 Jul-17 Jul-18 Jul-19 Jul-20

Sheng Siong - (LHS, SGD)

Sheng Siong / Straits Times Index - (RHS, %)

76.0

140.6117.0

102.3 101.8

7.7%

10.1%8.6%

8.0% 8.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0.0

50.0

100.0

150.0

2019 2020 2021E 2022E 2023E

Net profit Net profit margin

1

2

3

5

4

July 31, 2021 3

Sheng Siong Group

kareenchan@maybank.com

Risk Rating & Score¹ 21.4 (Medium)

Score Momentum² -4.0

Last Updated 14 April 2021

Controversy Score³ (Updated: 1 Jan 2000)

0 – No Reported Incident

Business Model & Industry Issues

SSG has identified food and product safety as its top priority in its ESG goals. SSG recognises its responsibility as the final

gatekeeper in the supply chain to safeguard the health, safety and interests of its customers. This also helps build brand

loyalty with its customers.

SSG is also committed to promoting sustainable sourcing along its value chain. It will continue to practice diversification in its

sourcing strategy, while ensuring its produce remain affordable and competitively priced,

With a rising awareness of leading a healthy lifestyle in Singapore, SSG believes it has a role to play by providing healthier and

more nutritious options for customers. SSG regularly reviews its range and selection of “healthier choice” and “trans-fat free”

products to determine the baseline for target setting. It will continuous develop new house-brand products to meet “healthier

choice” and/or “trans-fat free criteria”.

Material E issues

Some shoppers have become increasingly concerned about

the excessive use of plastic bags and SSG has taken a more

proactive stance to campaign for a reduction in the use of

plastic bags among its shoppers. Despite a reduction in

2019, the trend was reversed in 2020 with a 5% increase

due to higher business volume amid Covid-19.

Introduction of the mandatory reporting framework for

packaging postponed until this year.

SSG has partnered with a handful of suppliers to reuse

plastic crates for delivering fresh food.

Styrofoam boxes typically used by suppliers to deliver

temperature-sensitive products are washed, sanitised and

reused internally. Its overall recycling rate was 79.7% in

2020.

SSG is also committed to promoting sustainable sourcing.

86% of its house-brand paper products are certified under

the Forest Stewardship Council, while carrying a selection

of sustainable seafood such as Norwegian salmon, frozen

shrimp paste and frozen Norwegian mackerel.

Key G metrics and issues

SSG has 10 directors on its board, of which two (~20%) are

females; 4 out of 10 directors are independent.

Its executive directors, Mr Lim Hock Eng, Mr Lim Hock

Chee and Mr Lim Hock Leng are brothers. At the same

time, executive director Ms Lin Ruiwen is the daughter of

Mr Lim Hock Eng.

Independent directors chair the nomination, audit,

investment and remuneration committees.

SSG has reported zero incidents of discrimination.

In 2020, the top key management received SGD2.9m (2%

of net income).

SSG had no material related-party transactions that

negatively affected minority interest in the past.

No corruption cases reported.

Material S issues

Keeping essential products and produce affordable is

critical for SSG to remain competitive. As such, SSG has

extended a special 3% discount to senior citizens every

Wednesday for another year till 2022.

SSG works closely with the newly formed Singapore Agency

to ensure its farm-fresh produce and processed food

products are in compliant with the city’s food-safety

standards.

SSG is ISO22000:2005 certified for food-safety

management.

In 2020, SSG’s employees received bonuses ranging from

4.68 -15.72 months, depending on workers’ grade. As a

result, staff turnover rate declined to 24.3% from 33.5% in

2019.

¹Risk Rating & Score - derived by Sustainalytics and assesses the company’s exposure to unmanaged ESG risks. Scores range between 0 - 50 in order of increasing severity with low/high scores & ratings representing negligible/significant risk to the company’s enterprise value, respectively, from ESG-driven financial impacts. ²Score Momentum - indicates changes to the company's score since the last update – a negative integer indicates a company’s improving risk score; a positive integer indicates a deterioration. ³Controversy Score - reported periodically by Sustainalytics in the event of material ESG-related incident(s), with the impact severity scores of these events ranging from Category 0-5 (0 - no reports; 1 - negligible risks; ...; 5 - poses serious risks & indicative of potential structural deficiencies at the company).

July 31, 2021 4

Sheng Siong Group

1. Focus charts

Fig 1: Singapore is accelerating vaccination

Source: Ourworldindata

Fig 2: Supermarket industry forecasted to decline at 5.3% CAGR between 2020 and 2023E

Source: Euromonitor

Fig 3: We expect revenue per sqft to taper amid a more normalised Covid-scenario

Source: Maybank Kim Eng

Fig 4: Meanwhile, we expect new retail area to grow at a slower rate

Source: Company data, Maybank Kim Eng

Fig 5: P/E - 10-year mean

Source: Factset

Fig 6: MKE vs consensus

Source: Bloomberg, Maybank Kim Eng

1916

24232320

2100 2000

0

500

1000

1500

2000

2500

3000

2019 2020 2021E 2022E 2023E

Revenue per sqft

CAGR: -6.1%

404

496529

575 584 612 639

300

350

400

450

500

550

600

650

700

2017 2018 2019 2020 2021E 2022E 2023E

Total retail area ('000 sqft)

CAGR: 12%

CAGR: 5%

FY21E FY22E FY23E

Revenue (SGD 'm) 1,355.2 1,284.2 1,277.8

Gross profit margin (%) 27.5 27.2 27.2

Net profit (SGD 'm) 116.8 102.0 101.5

Target Price (SGD) 1.33

Revenue (consensus) 1276 1270 1346

Gross profit margin (consensus) 27.5 27.2 27.3

Net profit (consensus) 109 107.6 114

Target Price (SGD) 1.75

Revenue (MKE/ consensus) 106% 101% 95%

Net profit (MKE/ consensus) 107% 95% 89%

July 31, 2021 5

Sheng Siong Group

2. Investment thesis

2.1 Supermarket industry to face headwinds

Euromonitor projects supermarket sales in Singapore to decline by a CAGR

of 5.3% from 2020-2023E. This is because supermarket sales are likely to

normalise in the near to medium term as diners switch to eating out as

food centres and restaurants reopen in 4Q21 following the current ban.

Fig 7: Forecasted supermarket sales (2018-2023E)

Source: Euromonitor

Supermarket sales already started to decline in Mar’21. This suggests sales

are tapering off from a high base last year.

Fig 8: Supermarket sales YoY growth (Jan’20 – May’21)

Source: Singstats

Going forward, we think SSG’s sales will also taper against the backdrop of

easing of dining out restrictions, as well as the rising trend of food

delivery.

3,524 3,560

4,579 3,914 3,731 3,883

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2018 2019 2020 2021E 2022E 2023E

-40%

-20%

0%

20%

40%

60%

80%

Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21

July 31, 2021 6

Sheng Siong Group

Easing of social-distancing measures

SSG has benefitted from elevated demand amid the Covid-19 Circuit

Breaker in FY20. However, we opine SSG is unlikely to experience another

windfall this year and we expect tapering demand in the coming quarters

as social-distancing measures may be eased in 4Q21.

We see less likelihood of a lockdown again as compared to a year ago due

to wider vaccination in Singapore, and improved contact tracing and

testing capabilities to better contain the virus.

Additionally, Minister for Finance Lawrence Wong, who co-chairs the

multi-ministry task force for tackling the pandemic, said some social-

distancing measures will be progressively eased as vaccination rates go up.

Currently, c.62.8% of Singapore’s population has received at least one jab

of the vaccine and it’s accelerating the programme and will increase this

by 70%. The country is targeting to achieve herd immunity and is looking

at relaxing its border rules by Sep’21. This should result in relaxation of

the current dining ban.

Fig 9: Percentage of people in Singapore that received at least one dosage of the vaccine

Source: Ourworldindata

In addition, Singapore is looking to allow quarantine-free travel for those

who are fully vaccinated against Covid-19 from September, when 80% of

Singapore’s population should be inoculated. The city is also set to review

whether to loosen curbs in early Aug, when two-thirds of its population

would be fully vaccinated.

Grocery footfalls could return to pre-Covid levels under normalised

scenario

Life in the US is gradually returning to normal. This is because of the

relatively high vaccination rate (at least one jab: 55.9%, fully vaccinated:

48.3%) and as infections are better contained. On 13 May, the US Centres

for Disease Control and Prevention advised that fully vaccinated people do

not need to wear masks outdoors and could avoid wearing them indoors in

most places. Additionally, fully immunised people do not need to

physically distance themselves in most places.

Due to a higher vaccination rate, consumers are going to supermarkets

less frequently as they are dining out more. Based on Google Mobility

report, footfalls at grocery stores and pharmacies are back to an average

62.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21

July 31, 2021 7

Sheng Siong Group

of -3% pre-Covid levels YTD. This presents potential downside risks for

footfalls at grocery stores.

Fig 10: Average YTD mobility trends for places like grocery markets and pharmacies

Source: Google Mobility report

Overall, Singapore is moving progressively towards reopening in the near

term. As such, SSG is likely to face industry headwinds arising from

tapering revenue in the near to medium term as grocery demand

normalises.

More F&B players finding ways to get into consumers’ palate

At the same time, food delivery is increasingly seen as another dining

option. The pandemic has accelerated growth of food delivery and this

trend is also fuelled by the concept of cloud kitchens – which operate

exclusively in the delivery-only segment, without their own dining space.

The cloud-kitchen model cuts down on operating costs as a smaller space

is needed for food preparation. In addition, cloud kitchens are also acting

as a sandbox for virtual F&B brands to test out new concepts.

There are currently at least seven cloud kitchen players in the Singapore

market, with plans to open more cloud kitchens across the island. This is a

meaningful increase from just two players in 2019.

Fig 11: The number of cloud-kitchen players in Singapore market (2019 vs 2021)

2019 2021

Deliveroo Grab

Foodpanda Deliveroo

Foodpanda

Smart City Kitchens

Tiffins Lab

Select Group

Kishin RK

Source: Maybank Kim Eng

At the same time, we forecast food delivery revenue to grow by a CAGR of

11% by 2025, signalling F&B and food delivery platform players’ vision to

push their offerings to consumers even in the post-Covid scenario.

-3.8%

3.1%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

US SG

July 31, 2021 8

Sheng Siong Group

Fig 12: Online food delivery (2017-2024E)

Source: Maybank Kim Eng

Concurrently, Singaporeans appears to be more receptive to food delivery.

Compared to the global average of 33%, 44% of Singaporeans have visited

restaurant delivery websites or meal-kit-delivery services online.

Convenience and health considerations were the main factors that drove

this trend.

Additionally, SSG is comfortable with maintaining revenue per sqft of

SGD2,000 in a post-Covid scenario, where we anticipate relaxation of

travel borders by FY23E. We therefore expect SSG’s revenue per sqft

growth to decline at a CAGR of 6.2% between FY20 and FY23E against the

backdrop of a more normalised Covid scenario.

Fig 13: Estimated revenue per sqft – 2019-2023E

Source: Maybank Kim Eng

Rising commodity prices present more downside risks to SSG’s gross

profit margin

SSG has benefitted from rising gross margin over the years against the

backdrop of easing commodity prices. However, global food prices are

seeing a sharp increase in a decade and the cost of labour, transport and

shipping is expected to push prices higher in the coming months. This

presents more downside risks for SSG’s gross margin going forward.

1916

24232320

21002000

0

500

1000

1500

2000

2500

3000

2019 2020 2021E 2022E 2023E

Revenue per sqft

CAGR: -6.2%

206.4

268

342.1

464.2

541.5

606.6658.5

698.3

0

100

200

300

400

500

600

700

800

2017 2018 2019 2020 2021E 2022E 2023E 2024E

USD 'm

CAGR: 11%

July 31, 2021 9

Sheng Siong Group

Coupled with a reduction of demand for its household brands on the back

of a shift towards an endemic phase, we forecast SSG’s gross margin to

narrow to 27.2% by FY23E.

Fig 14: CRB Index Foodstuff – 2007-2021

Source: Maybank Kim Eng

Fig 15: Gross profit margin – 2019 – 2023E

Source: Company data, Maybank Kim Eng

Additionally,

2.2 Store openings disrupted by Covid

SSG has benefitted from its strategy of opening new stores since 2018 (10

in 2018, five in 2019 and four in 2020). This has helped the group to be

well positioned for heightened demand during Covid-19.

SSG opened five stores and closed one in 2020, with total store count of

63 and retail space of 571,150sf (+7.9% YoY) in Singapore. The group has

been growing its retail area at a CAGR of 4.6%.

Fig 16: Historical total retail area (2012-2020)

Source: Company data

However, we are seeing clouded visibility of new store opening going

forward. SSG has shared that its tender for the only two HDB commercial

units (Blk 115A Alkaff Crescent and Blk 610 Tampines North Drive) was

unsuccessful for the year. Given the disruption to the construction

industry caused by the pandemic, there are currently no new shop tenders.

250

300

350

400

450

500

Mar-07 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Mar-19 Mar-21

Last price

26.9%

27.4%27.5%

27.2% 27.2%

26.6%

26.7%

26.8%

26.9%

27.0%

27.1%

27.2%

27.3%

27.4%

27.5%

27.6%

2019 2020 2021E 2022E 2023E

400 400 404431

450

404

496529

575

300

350

400

450

500

550

600

2012 2013 2014 2015 2016 2017 2018 2019 2020

Total retail area ('000 sqft)

July 31, 2021 10

Sheng Siong Group

However, it’s likely that more new shop tenders could be released

towards the end of 2021 and 2022 as HDB rushes to clear the backlog.

As such, our forecast assumes one in new store opening (China) in FY21E

and three new stores in FY22E and three in FY23E. This translates to a

three-year CAGR of 5%, which is slower than its average of 12% between

2018 and 2020.

Fig 17: Estimated total retail area – 2021E-2023E

Source: Company data, Maybank Kim Eng

With tapering demand and slower rate of new store opening, we are

estimating EPS to decline at a CAGR of 10.2% between FY20-23E.

2.3 Supermarket with low e-commerce exposure

No intention to expand its e-commerce capability

In 2014, SSG started the “allforyou.sg” online shopping platform for groceries, which offers e-commerce services in almost all postal districts in Singapore. The main purpose of the e-commerce platform is to increase their outreach to customers in areas where SSG does not have a physical presence. In 2019, the e-commerce’s share of the group’s revenue was between 1% and 2%. In “allforyou.sg”, delivery slots appears limited, suggesting that SSG could have reached its maximum capacity for its e-commerce business. However, management is not looking to expand e-commerce capability extensively at this point.

404

496529

575 584612

639

300

350

400

450

500

550

600

650

700

2017 2018 2019 2020 2021E 2022E 2023E

Total retail area ('000 sqft)

CAGR: 12%

CAGR: 5%

July 31, 2021 11

Sheng Siong Group

Fig 18: No available delivery slots

Source: Company data

Consumers sticking with their online grocer The pandemic has accelerated the adoption of online grocery, fuelled by shoppers avoiding public places, government orders to stay at home and the continued need for groceries and essential goods. According to grocery e-commerce specialist Mercatus and research firm Incisiv Projects, online grocery will swell by 21.5% of total US grocery sales by 2025, more than doubling its current share of the overall grocery market.

Fig 19: Online grocery penetration rate (2021E-2025E)

Source: Mercatus, Incisiv Projects

The study also stated that post-pandemic, 90% of e-grocery customers are expected to continue shopping online and only 7% of the online grocery shoppers will return to brick-and-mortar stores. Elsewhere in China, fresh produce and groceries largely remained offline until Covid-19 hit. The disruption has also substantially accelerated the adoption of online fresh food buying and many continued to rely on online delivery after the return to normalcy.

2.7% 3.4%

10.2%

12.5%

14.6%

16.9%

19.1%

21.5%

4.3%5.4%

6.8%

8.5%

10.7%

13.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Grocery eCommerce sales % (Post-Covid)

Grocery eCommerce sales % (Pre-Covid)

July 31, 2021 12

Sheng Siong Group

Based on a Chinese consultancy, iResearch, the web penetration for fresh food produce is expected more than double to 20% by 2023, from less than 10% in 2020. In our view, Singapore’s online grocery market could potentially see elevated sales proportion from online grocery in a post-Covid scenario. According to Google Trends - which tracks the search interest of a particular search term over time across Google Search, Google News, Google Image, Google shopping and YouTube - RedMart (owned by Alibaba-backed Lazada) has been leading the search terms compared to the rest of the grocers for the past five years.

Fig 20: Average Google interest among grocers – 2016 to 2021

Source: Google interest, Maybank Kim Eng

In our view, it could be harder for SSG to penetrate the online grocery market in the future given RedMart’s leading market position and investments made already. The leading online grocery retailer has raised over SGD55.1m in funding in over seven rounds between 2011 and 2015, before it was acquired by e-commerce platform Lazada for an undisclosed sum. SSG’s product mix has been focused on fresh food items and its entry into the e-commerce space would require SSG to pour in additional capex on cooling technologies and insulation materials for last-mile deliveries. In addition, Sheng Siong has explained that it is not at the stage to invest in ecommerce technology due to manpower issue.

2.4 Valuation summary

Our TP of SGD1.33 is based on 19.5x FY21E EPS, which is 0.5 S.D below (or

6% discount to) its historical mean of 20.8x. In our view, this is justified as

SSG is facing EPS decline (CAGR of 8.5% between FY20 and 23E) as we

expect social-distancing measures will ease in 4Q21, there are more dining

options and the slower rate of new store openings.

Fig 21: Valuation parameter

Historical mean - 10-year P/E (x) 20.8

Discount 6%

Target P/E multiple (x) 19.5

FY22E EPS (SGD) 0.071

Target price 1.33

Source: Maybank Kim Eng

0 10 20 30 40

Redmart

Fairprice Online

Amazon Fresh

Sheng Siong online

Giant online

July 31, 2021 13

Sheng Siong Group

Fig 22: 3-year forward P/E

Source: Factset

Fig 23: 5-year forward P/E

Source: Factset

Fig 24: 10-year forward P/E

Source: Factset

We therefore initiate coverage with a SELL and TP of SGD1.33. Take profit

on strength and switch to cyclical stocks/ beneficiaries of reopening.

Sheng Siong is trading at a 61% premium to its Asian peers. We identified

DFI SP as Sheng Siong’s direct comparable. We also include major listed

Asian and global supermarkets and staple retailers in our peer comparison.

We observe other peers are trading at an average of 13.9x FY22E P/E, or a

37% discount to Sheng Siong.

Fig 25: Peer comparison

Company Ticker Price Mcap Country of P/E (x) Div Yield (%) ROE (%) 3Y EPS CAGR

LC USD b listing FY1 FY2 FY3 FY1 FY2 FY1 FY2 (%)

Dairy Farm International DFI SP 4.04 5.47 Singapore 18.2 14.6 13.0 4.3 4.3 21.2 24.6 16.0

Yonghui superstores 601933 CN 4.02 5.91 China 17.9 13.4 16.6 3.0 3.0 9.5 12.3 8.6

Better Life Commercial Chain 002251 CN 6.86 0.92 China 23.6 18.6 20.4 1.5 1.5 3.3 4.0 36.9

Sun Art Retail SAR HK 4.93 6.05 Hong Kong 16.0 14.5 13.1 2.2 2.2 8.8 9.2 -1.5

Arcs Co Ltd ACL JP 2269 1.18 Japan 11.4 11.0 10.6 2.4 2.4 6.7 6.6 -2.4

Valor Holdings 9956 JP 2334 1.14 Japan 10.1 9.1 8.3 2.4 2.4 8.2 8.5 6.0

Puregold Price Club Inc PGOLD PH 39.55 2.27 Philippines 13.6 12.1 11.0 1.2 1.2 11.2 11.4 10.8

Average 16.9 13.9 14.0 3.0 3.0 11.8 13.5 8.3

Source: Factset, Maybank Kim Eng

With limited catalysts, we estimate SSG’s FY21/22/23E EPS to decline at

11%, with FY21/22/23E dividend yield of 3.2%.

The following are MKE’s Top 10 BUY calls with stronger fundamentals, an

average EPS growth of >2% and forward yield of >3.2%.

July 31, 2021 14

Sheng Siong Group

Fig 26: Coverage universe (BUYs)

Stock BBG M.Cap Rec Price TP Upside EPS gr. (%) P/E (x) ROE (%) P/B (x) Div Yield (%)

Code SGDm SGD SGD % CY21E CY22E CY21E CY22E CY21E CY22E CY21E CY22E CY21E CY22E

DBS DBS SP 56,675 Buy 29.54 33.71 14.1 39.7 7.5 11.4 10.2 12.1 12.1 1.4 1.3 3.7 4.7

OCBC OCBC SP 39,300 Buy 11.74 14.17 20.7 39.5 6.9 10.7 9.8 9.9 10.0 1.0 1 4.3 5.1

UOB UOB SP 31,976 Buy 25.58 29.34 14.7 37.2 12.3 10.7 9.1 9.2 9.9 1.0 1 4.7 5.5

Singtel ST SP 27,551 Buy 2.25 2.81 24.9 359.9 18.2 14.4 12.2 9.6 11.3 1.4 1.4 5.2 6.1

Venture VMS SP 4,032 Buy 18.66 22.00 17.9 11.3 6.4 15.8 13.8 12.5 12.6 2.0 1.9 4.0 4.0

Ascendas REIT AREIT SP 9,174 Buy 2.97 3.65 22.9 41.8 6.1 18.8 17.8 6.8 6.9 1.3 1.3 5.3 5.6

Frasers Ct.pt. FCT SP 3,086 Buy 2.45 2.90 18.4 34.6 8.3 19.6 19.1 6.1 5.4 1.0 1 5.1 5.2

ComfortDelGro CD SP 2,587 Buy 1.61 1.88 16.8 228.8 21.4 18.5 14.4 7.5 8.6 1.2 1.2 3.2 5.6

Genting SG GENS SP 7,532 Buy 0.84 1.16 38.1 295.0 91.5 60.0 26.2 3.5 6.6 1.3 1.3 1.2 2.4

ThaiBev THBEV SP 12,385 Buy 0.67 0.99 48.9 10.0 7.1 14.3 13.3 17.5 17.3 2.6 2.3 3.3 3.6

Source: Maybank Kim Eng

July 31, 2021 15

Sheng Siong Group

3. Financial analysis

3.1 P&L

We forecast revenue growth of -2.8% in FY21E and -5.2% in FY22E and -

0.5% in FY23E on the back of tapering revenue and slower rate of new

store openings.

We assume SSG’s gross profit margin to narrow slightly to 27.2% by FY23E

due to higher input prices, which is partially offset by favourable sales mix

and cost efficiencies.

Throughout our forecast horizon of FY21-23E, we expect revenue and

earnings decline to be primarily driven by tapering sales and negative

operating leverage. As a result, we expect net margin to be around 8.0-

8.6% over the same period. Excluding FY20, SSG’s EPS growth would have

been increasing at a CAGR of 10.2% between 2019 and 2023E

Fig 27: P&L assumptions

FYE 31 Dec (SGDm) 2019 2020 2021E 2022E 2023E Comments

Sales 991.3 1,394.00 1,355.20 1,284.20 1,277.80 Tapering revenue sqft and slower rate of new

store opening

Cost of goods sold -724.4 -1,012.10 -982.5 -934.9 -930.2

Gross profit 266.9 381.9 372.7 349.3 347.6

Operating expenses -174.3 -215.7 -234.2 -228.1 -227.0

Operating Profit 92.6 166.1 138.5 121.2 120.6

Net Int income/ (exp) -0.7 -1.0 -1.0 -1.0 -1.0

Net other non-op. JV+Assc. 0.0 0.0 0.0 0.0 0.0

Net extraordinaries 0.0 0.0 0.0 0.0 0.0

Pretax profit 91.9 165.1 137.4 120.1 119.5

Income taxes -16.2 -24.8 -20.7 -18.1 -18.0

Minority Interests 0.0 0.0 0.0 0.0 0.0

PATMI 75.8 140.3 116.8 102.0 101.5

EPS (SGD) 0.05 0.09 0.08 0.07 0.07

EBITDA (SGDm) 110.9 187.1 158.8 140.5 139.8

Gross margin (%) 26.9 27.4 27.5 27.2 27.2 Gross profit margin to taper back to pre-Covid

levels

Net margin (%) 7.7 10.1 8.6 8.0 8.0

Growth (YoY)

Revenue 11.30% 40.60% -2.80% -5.20% -0.50%

PATMI 1.40% 7.40% 85.20% -16.80% -12.60%

Source: Maybank Kim Eng

The following is the breakdown of revenue growth:

FYE 31 Dec (SGDm) 2019 2020 2021E 2022E 2023E

New stores sales growth 10.1% 10.2% 10.5% 2.0% 10.1%

Same store sales growth 1.7% 0.1% 29.1% -5.7% -16.3%

Store closure -5.4%

Supermarket in China 1.0% 1.0% 1.0% 1.0% 1.0%

Total revenue growth 7.4% 11.3% 40.6% -2.7% -5.2%

3.2 Balance sheet and cash flow

As of 2QFY21, SSG has a net cash position of SGD271.5m or SGD0.181/per

share. Given its strong balance sheet, we think that SSG could maintain its

DPS and we forecast a DPS of SGD0.05 in FY21-23E. This translates to a

dividend yield of 3.2% and a DPS payout ratio of 60%

We assume capex to remain relatively stable at 1.1-2% of total sales from

FY21-23E, it primarily comprises of maintenance capex and capex budget

for its expansion plan.

July 31, 2021 16

Sheng Siong Group

Fig 28: Capex and capex as % of sales – 2019E-2023E

Source: Company data, Maybank Kim Eng

3.3 MKE vs consensus

Fig 29: MKE vs consensus

FY21E FY22E FY23E

Revenue (SGD 'm) 1,355.2 1,284.2 1,277.8

Gross profit margin (%) 27.5 27.2 27.2

Net profit (SGD 'm) 116.8 102.0 101.5

Target Price (SGD) 1.33

Revenue (consensus) 1276 1270 1346

Gross profit margin (consensus) 27.5 27.2 27.3

Net profit (consensus) 109 107.6 114

Target Price (SGD) 1.75

Revenue (MKE/ consensus) 106% 101% 95%

Net profit (MKE/ consensus) 107% 95% 89%

Source: Company data, Maybank Kim Eng

4.8%

1.2%1.1%

2.0% 2.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

2019 2020 2021E 2022E 2023E

SGD 'm

Capex Capex to sales

July 31, 2021 17

Sheng Siong Group

4. Corporate information

4.1 Business overview SSG is the second largest supermarket operator in Singapore with 63 stores

located across the island. As at 2020, SSG has over 1,400 products under

23 house brands. In 2017, SSG opened its first overseas store in Kunming,

China and a second one in Jun’19.

Fig 30: Market share in Singapore (2015 to 2020)

Source: Euromonitor

A modern and more efficient version of wet markets

SSG’s brand positioning – affordability, with fresh food offerings that can

rival against wet markets. SSG’s key strength lies with its offering of

higher margin fresh foods, which has resulted in improving gross margin

over the years.

Fig 31: SSG’s gross profit margin (2014 -2020)

Source: Company data, Maybank Kim Eng

Higher gross profit margin is driven by lower input prices and shift towards

higher-margin fresh foods. In our view, this implies a market share gain

from wet markets.

40% 42% 42% 42% 42% 41%

23% 24% 24% 25% 26% 27%

29% 27% 25% 23% 22% 22%

4% 4% 4% 4% 4% 4%4% 3% 3% 3% 4% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018 2019 2020

NTUC Fairprice Sheng Siong Dairy Farm

Prime supermarket U Stars Others

24.2%

24.7%

25.7%

26.2%

26.8%26.9%

27.4%

22.0%

23.0%

24.0%

25.0%

26.0%

27.0%

28.0%

2014 2015 2016 2017 2018 2019 2020

July 31, 2021 18

Sheng Siong Group

This is supported by a National Environment Agency (NEA) survey

conducted in 2019, which found 39% of Singaporeans had not been to a

wet market in the previous 12 months. The numbers have been rising

steadily since 2014.

Fig 32: % of Singaporeans who had not been to a wet market: 2014, 2016, 2019

Source: todayonline

Cautious approach to its China business; unlikely to move the EPS

needle yet

SSG had also entered into a lease agreement for a retail space of c.

37,800 sqft in Kunming, China. The new store is expected to be

operational before the end of 3Q21. This will bring the group’s store count

to 63 in Singapore and three in China. However, the new store is not

expected to make a significant impact on the group’s EPS.

Currently, the revenue for its other two outlets in China accounts for only

2% of its total revenue. Management is taking a precautionary approach

with its expansion in China.

Wet markets are becoming less cost-efficient due to their lack of scale

Anecdotally, many wet market vendors also said that business has been

getting tougher for them over the years, as shoppers are increasingly

turning to supermarkets and grocery delivery services.

Given the slowing demand, the wet market vendors responded by ordering

less from suppliers. We think this would inevitably reduce bargaining

power and cost efficiencies as compared to SSG due to the lack of

economies of scale.

Going forward, the government announced that the inclusion of a wet

market “might only be considered” if there is strong community demand.

This signals a shift in public policy, which can be favourable to

supermarket operators.

23%

33%

39%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2014 2016 2019

July 31, 2021 19

Sheng Siong Group

5. Risks

SSG is exposed to a number of risks that could affect our views and

forecasts for the company. The most material risks are:

5.1 Disease outbreak affecting demand for food products

Any outbreak of diseases in livestock or food scares in the region such as

the avian influenza H5N1 virus, H1N1 influenza, salmonella, porcine

respiratory and encephalitis syndrome or the Nipah virus, may lead to a

reduction in the consumption of the affected type of food by consumers.

The reduction in demand may affect the sale mix of fresh food, resulting

in a contraction in gross profit margin.

5.2 Supply chain disruption

Supply chain disruption may lead to an increase in the prices of affected

food products, which SSG may not be able to pass on to its customers. Any

increase in input costs may adversely affect its financial performance.

Political and economic instability resulting from terrorist attacks and/or

armed conflicts could also negatively impact its suppliers’ business

operations and in turn SSG’s financial performance.

5.3 Rising labour costs

SSG’s business of grocery retailing is labour-intensive and its ability to

meet its labour requirements, whilst controlling wage and labour-related

costs, may be subject to numerous external factors, including the

availability of a sufficient number of suitable persons in the relevant work

force, prevailing wage rates, demographics and health and insurance costs.

At times, the grocery retailing industry has experienced a shortage of

skilled personnel, especially store managers. The supermarket industry

therefore competes against other grocery retailers and other retailers for

such skilled personnel.

As such, SSG may have to increase wages and benefits to attract and

retain qualified personnel or risk considerable employee turnover.

5.4 Competition risks

SSG faces intense competition from traditional grocery retailers such as

wet markets, supermarkets and hypermarkets, and from non-traditional

competitors such as convenience stores, petrol kiosk convenience stores

and restaurants.

Increased competition may result in lower sales and greater operating

costs and have an adverse effect on its financial performance. Its ability

to attract customers depends largely on a combination of location, quality,

price, service, selection and condition of groceries and other retail

products.

Pricing is a significant driver in consumers’ buying decisions and

competitors may engage in price competition, which may increase its

costs.

July 31, 2021 20

Sheng Siong Group

Bigger players may have greater supply or distribution networks, brand

recognition, or financial resources, and may be able to devote greater

resources to pricing and promotional programmes - by selling inventory at

below cost to drive sales increases. There can be no assurance SSG will

have sufficient resources to respond to competitors’ investments in stores

and pricing and promotional programmes.

July 31, 2021 21

Sheng Siong Group

FYE 31 Dec FY19A FY20A FY21E FY22E FY23E

Key Metrics

P/E (reported) (x) 22.3 16.1 20.2 23.1 23.2

Core P/E (x) 24.6 16.6 20.2 23.1 23.2

P/BV (x) 6.0 6.3 5.8 5.5 5.2

P/NTA (x) 6.0 6.3 5.8 5.5 5.2

Net dividend yield (%) 2.8 3.4 3.4 3.4 3.4

FCF yield (%) 6.1 9.6 2.0 6.9 1.2

EV/EBITDA (x) 16.2 11.3 13.7 14.9 15.3

EV/EBIT (x) 19.3 12.7 15.7 17.2 17.7

INCOME STATEMENT (SGD m)

Revenue 991.3 1,394.0 1,355.2 1,284.2 1,277.8

EBITDA 110.6 186.8 158.6 140.2 139.5

Depreciation (18.1) (20.7) (20.1) (19.0) (19.0)

Amortisation 0.0 0.0 0.0 0.0 0.0

EBIT 92.6 166.1 138.5 121.2 120.6

Net interest income /(exp) (0.7) (1.0) (1.0) (1.0) (1.0)

Associates & JV 0.0 0.0 0.0 0.0 0.0

Exceptionals 0.0 0.0 0.0 0.0 0.0

Other pretax income 0.0 0.0 0.0 0.0 0.0

Pretax profit 91.9 165.1 137.4 120.1 119.5

Income tax (16.2) (24.8) (20.7) (18.1) (18.0)

Minorities 0.0 0.0 0.0 0.0 0.0

Discontinued operations 0.0 0.0 0.0 0.0 0.0

Reported net profit 75.8 140.3 116.8 102.0 101.5

Core net profit 75.8 140.3 116.8 102.0 101.5

BALANCE SHEET (SGD m)

Cash & Short Term Investments 76.4 253.9 387.9 471.0 418.6

Accounts receivable 18.0 19.9 16.9 18.0 16.8

Inventory 82.2 77.9 77.5 70.4 76.7

Property, Plant & Equip (net) 295.3 291.6 285.9 292.5 299.3

Intangible assets 0.0 0.0 0.0 0.0 0.0

Investment in Associates & JVs 0.0 0.0 0.0 0.0 0.0

Other assets 60.9 48.7 48.7 48.7 48.7

Total assets 532.8 692.1 816.9 900.6 860.0

ST interest bearing debt 0.0 15.0 180.0 180.0 180.0

Accounts payable 140.8 208.1 130.6 191.7 128.9

LT interest bearing debt 0.0 15.0 15.0 15.0 15.0

Other liabilities 77.0 79.0 79.0 79.0 79.0

Total Liabilities 217.4 317.0 404.4 465.5 402.8

Shareholders Equity 313.3 372.4 409.7 432.4 454.5

Minority Interest 2.1 2.7 2.7 2.7 2.7

Total shareholder equity 315.4 375.1 412.5 435.1 457.2

Total liabilities and equity 532.8 692.1 816.9 900.6 860.0

CASH FLOW (SGD m)

Pretax profit 91.9 165.1 137.4 120.1 119.5

Depreciation & amortisation 18.1 20.7 20.1 19.0 19.0

Adj net interest (income)/exp 0.0 0.0 0.0 0.0 1.0

Change in working capital 24.6 65.2 (74.1) 67.1 (67.8)

Cash taxes paid (14.8) (11.1) (20.7) (18.1) (18.0)

Other operating cash flow 0.0 0.0 0.0 0.0 1.0

Cash flow from operations 119.7 239.9 62.8 188.2 54.7

Capex (6.9) (17.0) (14.4) (25.7) (25.7)

Free cash flow 112.8 222.9 48.4 162.5 29.0

Dividends paid (52.6) (79.7) (79.7) (79.7) (79.7)

Equity raised / (purchased) 0.0 0.0 0.0 0.0 0.0

Perpetual securities 0.0 0.0 0.0 0.0 1.0

Change in Debt 0.0 30.0 165.0 0.0 0.0

Other invest/financing cash flow (31.8) 5.9 0.0 0.0 0.0

Effect of exch rate changes (0.3) (1.9) 0.0 0.0 0.0

Net cash flow 28.1 177.2 133.7 82.9 (49.7)

July 31, 2021 22

Sheng Siong Group

FYE 31 Dec FY19A FY20A FY21E FY22E FY23E

Key Ratios

Growth ratios (%)

Revenue growth 11.3 40.6 (2.8) (5.2) (0.5)

EBITDA growth 10.4 68.9 (15.1) (11.6) (0.5)

EBIT growth 10.5 79.4 (16.7) (12.5) (0.5)

Pretax growth 8.5 79.6 (16.8) (12.6) (0.5)

Reported net profit growth 7.4 85.2 (16.8) (12.6) (0.5)

Core net profit growth 7.4 85.2 (16.8) (12.6) (0.5)

Profitability ratios (%)

EBITDA margin 11.2 13.4 11.7 10.9 10.9

EBIT margin 9.3 11.9 10.2 9.4 9.4

Pretax profit margin 9.3 11.8 10.1 9.4 9.4

Payout ratio 69.5 56.8 68.2 78.1 78.5

DuPont analysis

Net profit margin (%) 7.6 10.1 8.6 7.9 7.9

Revenue/Assets (x) 1.9 2.0 1.7 1.4 1.5

Assets/Equity (x) 1.7 1.9 2.0 2.1 1.9

ROAE (%) 25.1 40.9 29.9 24.2 22.9

ROAA (%) 15.6 22.9 15.5 11.9 11.5

Liquidity & Efficiency

Cash conversion cycle (22.8) (28.7) (28.7) (28.7) (28.7)

Days receivable outstanding 5.6 4.9 4.9 4.9 4.9

Days inventory outstanding 37.8 28.5 28.5 28.5 28.5

Days payables outstanding 66.2 62.0 62.0 62.0 62.0

Dividend cover (x) 1.4 1.8 1.5 1.3 1.3

Current ratio (x) 1.0 1.3 1.3 1.3 1.4

Leverage & Expense Analysis

Asset/Liability (x) 2.5 2.2 2.0 1.9 2.1

Net gearing (%) (incl perps) net cash net cash net cash net cash net cash

Net gearing (%) (excl. perps) net cash net cash net cash net cash net cash

Net interest cover (x) 137.0 nm 134.2 117.4 116.8

Debt/EBITDA (x) 0.0 0.2 1.2 1.4 1.4

Capex/revenue (%) 0.7 1.2 1.1 2.0 2.0

Net debt/ (net cash) (76.4) (223.9) (192.9) (276.0) (223.6)

Source: Company; Maybank

July 31, 2021 23

Sheng Siong Group

Research Offices

ECONOMICS

Suhaimi ILIAS Chief Economist Malaysia | Philippines | Global (603) 2297 8682 suhaimi_ilias@maybank-ib.com

CHUA Hak Bin Regional Thematic Macroeconomist (65) 6231 5830 chuahb@maybank.com

LEE Ju Ye Singapore | Thailand | Indonesia (65) 6231 5844 leejuye@maybank.com

Linda LIU Singapore | Vietnam | Cambodia | Myanmar | Laos (65) 6231 5847 lindaliu@maybank.com

Dr Zamros DZULKAFLI (603) 2082 6818 zamros.d@maybank-ib.com

Ramesh LANKANATHAN (603) 2297 8685 ramesh@maybank-ib.com

FX

Saktiandi SUPAAT Head of FX Research (65) 6320 1379 saktiandi@maybank.com.sg

Christopher WONG (65) 6320 1347 wongkl@maybank.com.sg

TAN Yanxi (65) 6320 1378 tanyx@maybank.com.sg

Fiona LIM (65) 6320 1374 fionalim@maybank.com.sg

STRATEGY

Anand PATHMAKANTHAN

ASEAN (603) 2297 8783 anand.pathmakanthan@maybank-ib.com

FIXED INCOME

Winson PHOON, ACA (65) 6340 1079 winsonphoon@maybank.com

SE THO Mun Yi (603) 2074 7606 munyi.st@maybank-ib.com

REGIONAL EQUITIES

Anand PATHMAKANTHAN Head of Regional Equity Research (603) 2297 8783 anand.pathmakanthan@maybank-ib.com

WONG Chew Hann, CA Head of ASEAN Equity Research (603) 2297 8686 wchewh@maybank-ib.com

ONG Seng Yeow Research, Technology & Innovation (65) 6231 5839 ongsengyeow@maybank.com

MALAYSIA

Anand PATHMAKANTHAN Head of Research (603) 2297 8783 anand.pathmakanthan@maybank-ib.com • Strategy

WONG Chew Hann (603) 2297 8686

wchewh@maybank-ib.com • Non-Bank Financials (stock exchange) • Construction & Infrastructure

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ONG Chee Ting, CA (603) 2297 8678 ct.ong@maybank-ib.com • Plantations - Regional

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TAN Chi Wei, CFA (603) 2297 8690 chiwei.t@maybank-ib.com • Power • Telcos

WONG Wei Sum, CFA (603) 2297 8679 weisum@maybank-ib.com • Property • Glove

Kevin WONG (603) 2082 6824 kevin.wong@maybank-ib.com • REITs • Technology

Jade TAM (603) 2297 8687 jade.tam@maybank-ib.com • Consumer Staples & Discretionary

Fahmi FARID (603) 2297 8676 fahmi.farid@maybank-ib.com • Software

Syifaa’ Nur FARAH (603) 2297 8675 nurfarahsyifaa.mohamadfuad@maybank-ib.com • Construction

Arvind JAYARATNAM (603) 2297 8692 arvind.jayaratnam@maybank.com • Petrochemicals

TEE Sze Chiah Head of Retail Research (603) 2082 6858 szechiah.t@maybank-ib.com

Nik Ihsan RAJA ABDULLAH, MSTA, CFTe (603) 2297 8694 nikmohdihsan.ra@maybank-ib.com • Chartist

Amirah AZMI (603) 2082 8769 amirah.azmi@maybank-ib.com • Retail Research

SINGAPORE

Thilan WICKRAMASINGHE Head of Research (65) 6231 5840 thilanw@maybank.com • Banking & Finance - Regional • Consumer

CHUA Su Tye (65) 6231 5842 chuasutye@maybank.com • REITs - Regional

LAI Gene Lih, CFA (65) 6231 5832 laigenelih@maybank.com • Technology • Healthcare

Kareen CHAN (65) 6231 5926 kareenchan@maybank.com • Transport • Telcos • Consumer

Eric ONG (65) 6231 5924 ericong@maybank.com • SMIDs

Matthew SHIM (65) 6231 5929 matthewshim@maybank.com

• Retail Research

PHILIPPINES

Jacqui de JESUS Head of Research (63) 2 8849 8840 jacqui.dejesus@maybank.com • Strategy • Conglomerates

Rachelleen RODRIGUEZ, CFA (63) 2 8849 8843 rachelleen.rodriguez@maybank.com • Banking & Finance • Transport • Telcos

Benedict CLEMENTE (63) 2 8849 8846 benedict.clemente@maybank.com • Utilities

Daphne SZE (63) 2 8849 8847 daphne.sze@maybank.com • Consumer

VIETNAM

Quan Trong Thanh Head of Research (84 28) 44 555 888 ext 8184 thanh.quan@maybank-kimeng.com.vn • Banks

Hoang Huy, CFA (84 28) 44 555 888 ext 8181 hoanghuy@maybank-kimeng.com.vn • Strategy • Technology

Le Nguyen Nhat Chuyen (84 28) 44 555 888 ext 8082 chuyen.le@maybank-kimeng.com.vn • Oil & Gas

Nguyen Thi Sony Tra Mi (84 28) 44 555 888 ext 8084 mi.nguyen@maybank-kimeng.com.vn • Consumer

Tyler Manh Dung Nguyen (84 28) 44 555 888 ext 8085 dung.nguyen@maybank-kimeng.com.vn • Utilities • Property

Tran Thi Thu Thao (84 28) 44 555 888 ext 8180 thao.tran@maybank-kimeng.com.vn • Industrials

Nguyen Thi Ngan Tuyen Head of Retail Research (84 28) 44 555 888 ext 8081 tuyen.nguyen@maybank-kimeng.com.vn • Retail Research

Nguyen Thanh Lam (84 28) 44 555 888 ext 8086 thanhlam.nguyen@maybank-kimeng.com.vn • Technical Analysis

INDIA

Jigar SHAH Head of Research (91) 22 4223 2632 jigars@maybank.com • Strategy • Oil & Gas • Automobile • Cement

Neerav DALAL (91) 22 4223 2606 neerav@maybank.com • Software Technology • Telcos

Vikram RAMALINGAM (91) 22 4223 2607 vikram@maybank.com • Automobile • Media

INDONESIA

Rahmi MARINA (62) 21 8066 8689 rahmi.marina@maybank-ke.co.id • Banking & Finance

Willy GOUTAMA (62) 21 8066 8500 willy.goutama@maybank-ke.co.id • Consumer

Farah OKTAVIANI (62) 21 8066 8691 farah.oktaviani@maybank-ke.co.id • Construction

THAILAND

Maria LAPIZ Head of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 Maria.L@maybank-ke.co.th • Strategy • Consumer • Materials • Services

Jesada TECHAHUSDIN, CFA (66) 2658 6300 ext 1395 jesada.t@maybank-ke.co.th • Banking & Finance

Kaushal LADHA, CFA (66) 2658 6300 ext 1392 Kaushal.l@maybank-ke.co.th • Oil & Gas – Regional • Petrochemicals - Regional • Utilities

Vanida GEISLER, CPA (66) 2658 6300 ext 1394 Vanida.G@maybank-ke.co.th • Property • REITs

Yuwanee PROMMAPORN (66) 2658 6300 ext 1393 Yuwanee.P @maybank-ke.co.th • Services • Healthcare

Ekachai TARAPORNTIP Head of Retail Research (66) 2658 5000 ext 1530 Ekachai.t@maybank-ke.co.th

Surachai PRAMUALCHAROENKIT (66) 2658 5000 ext 1470 Surachai.p@maybank-ke.co.th • Auto • Conmat • Contractor • Steel

Suttatip PEERASUB (66) 2658 5000 ext 1430 suttatip.p@maybank-ke.co.th • Food & Beverage • Commerce

Jaroonpan WATTANAWONG (66) 2658 5000 ext 1404 jaroonpan.w@maybank-ke.co.th • Transportation • Small cap

Thanatphat SUKSRICHAVALIT (66) 2658 5000 ext 1401 thanaphat.s@maybank-ke.co.th

• Media • Electronics

Wijit ARAYAPISIT (66) 2658 5000 ext 1450 wijit.a@maybank-ke.co.th • Strategist

Theerasate PROMPONG (66) 2658 5000 ext 1400 theerasate.p@maybank-ke.co.th • Equity Portfolio Strategist

Apiwat TAVESIRIVATE (66) 2658 5000 ext 1310 apiwat.t@maybank-ke.co.th • Chartist and TFEX

July 31, 2021 24

Sheng Siong Group

APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ fr om fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies d iscussed or recommended in this report.

The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.

This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these f orward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.

MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solic it business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report to the extent permitted by law.

This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for t he actions of third parties in this respect.

This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this repor t.

Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.

Singapore This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.

Thailand Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank Kim Eng Securities (Thailand) Public Company Limited. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) accepts no liability whatsoever for the actions of third parties in this respect.

Due to different characteristics, objectives and strategies of institutional and retail investors, the research products of MBKET Institutional and Retail Research departments may differ in either recommendation or target price, or both. MBKET reserves the rights to disseminate MBKET Retail Research reports to institutional investors who have requested to receive it. If you are an authorised recipient, you hereby tacitly acknowledge that the research reports from MBKET Retail Research are first pr oduced in Thai and there is a time lag in the release of the translated English version.

The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. MBKET does not confirm nor certify the accuracy of such survey result.

The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission. Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed company. The assessment result is therefore made from the perspective o f Thaipat Institute that is a third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as of the date appea ring in the assessment result, it may be changed after that date or when there is any change to the relevant information. Nevertheless, MBKET does not confirm, verify, or certify the accuracy and completeness of the assessment result.

US This third-party research report is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. All U.S. persons receiving and/or accessing this report and wishing to effect transactions in any security mentioned within must do so with: Maybank Kim Eng Securities USA Inc. 400 Park Avenue, 11th Floor, New York, New York 10022, 1-(212) 688-8886 and not with, the issuer of this report.

July 31, 2021 25

Sheng Siong Group

Disclosure of Interest

Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to he rein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Singapore: As of 31 July 2021, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report. Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report. Hong Kong: As of 31 July 2021, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report. India: As of 31 July 2021, and at the end of the month immediately preceding the date of publication of the research report, KESI, authoring analyst o r their associate / relative does not hold any financial interest or any actual or beneficial ownership in any shares or having any conflict of interest in the sub ject companies except as otherwise disclosed in the research report.

In the past twelve months KESI and authoring analyst or their associate did not receive any compensation or other benefits from the subject companies or third party in connection wi th the research report on any account what so ever except as otherwise disclosed in the research report.

MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.

OTHERS

Analyst Certification of Independence

The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

Reminder

Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to soph isticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

Definition of Ratings

Maybank Kim Eng Research uses the following rating system

BUY Return is expected to be above 10% in the next 12 months (including dividends)

HOLD Return is expected to be between 0% to 10% in the next 12 months (including dividends)

SELL Return is expected to be below 0% in the next 12 months (including dividends)

Applicability of Ratings

The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.

UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Conduct Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such li nks is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.

DISCLOSURES

Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938- H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This report is distributed in Singapore by Maybank KERPL (Co. Reg No 198700034E) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Maybank Kim Eng Securities (“PTMKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the Financial Services Authority (Indonesia). Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities Limited (License Number: 117/GP-UBCK) is licensed under the State Securities Commission of Vietnam. Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited and the Bombay Stock Exchange and is regulated by Securities and Exchange Board of India (“SEBI”) (Reg. No. INZ000010538). KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) and as Research Analyst (Reg No: INH000000057) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Conduct Authority.

July 31, 2021 26

Sheng Siong Group

Malaysia Maybank Investment Bank Berhad

(A Participating Organisation of

Bursa Malaysia Securities Berhad)

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100 Jalan Tun Perak,

50050 Kuala Lumpur

Tel: (603) 2059 1888;

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Singapore Maybank Kim Eng Securities Pte Ltd

Maybank Kim Eng Research Pte Ltd

50 North Canal Road

Singapore 059304

Tel: (65) 6336 9090

London Maybank Kim Eng Securities

(London) Ltd

PNB House

77 Queen Victoria Street

London EC4V 4AY, UK

Tel: (44) 20 7332 0221

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New York Maybank Kim Eng Securities USA

Inc

400 Park Avenue, 11th Floor

New York, New York 10022,

U.S.A.

Tel: (212) 688 8886

Fax: (212) 688 3500

Stockbroking Business:

Level 8, Tower C, Dataran Maybank,

No.1, Jalan Maarof

59000 Kuala Lumpur

Tel: (603) 2297 8888

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Hong Kong Kim Eng Securities (HK) Ltd

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1 Sunning Road, Causeway Bay,

Hong Kong

Tel: (852) 2268 0800

Fax: (852) 2877 0104

Indonesia PT Maybank Kim Eng Securities

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Tel: (62) 21 2557 1188

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India Kim Eng Securities India Pvt Ltd

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Wall Street, Chakala, Andheri -

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Tel: (91) 22 6623 2600

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Philippines Maybank ATR Kim Eng Securities Inc.

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Thailand Maybank Kim Eng Securities

(Thailand) Public Company Limited

999/9 The Offices at Central World,

20th - 21st Floor,

Rama 1 Road Pathumwan,

Bangkok 10330, Thailand

Tel: (66) 2 658 6817 (sales)

Tel: (66) 2 658 6801 (research)

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Saudi Arabia In association with

Anfaal Capital

Ground Floor, KANOO Building

No.1 - Al-Faisaliyah,Madina Road,

P.O.Box 126575 Jeddah 21352

Kingdom of Saudi Arabia

Tel: (966) 920023423

South Asia Sales Trading Kevin Foy

Regional Head Sales Trading

kevinfoy@maybank-ke.com.sg

Tel: (65) 6636-3620

US Toll Free: 1-866-406-7447

North Asia Sales Trading Andrew Lee

andrewlee@kimeng.com.hk

Tel: (852) 2268 0283

US Toll Free: 1 877 837 7635

Indonesia Iwan Atmadjaja iatmadjaja2@bloomberg.net (62) 21 8066 8555

London Greg Smith gsmith@maybank-ke.co.uk Tel: (44) 207-332-0221

New York James Lynch jlynch@maybank-keusa.com Tel: (212) 688 8886

India Sanjay Makhija sanjaymakhija@maybank-ke.co.in Tel: (91)-22-6623-2629

Philippines Keith Roy keith_roy@maybank-atrke.com Tel: (63) 2 848-5288

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